Redcape Property Group
is expected to confirm today it has agreed to a deal with Goldman Sachs and US hedge fund York Capital to recapitalise the pub trust in a move likely to heavily dilute existing unit holdings.

Westpac and Bank of Queensland, two of Redcape’s nine bankers, offloaded their loans to York last Friday for about 80¢ in the dollar.

The combined value of the debt is close to $260 million, representing 40 per cent of the ailing property group’s $650 million debt pile.

The transaction came as a bolt out of the blue for the Laundy family, who were in the final stages of negotiations on a $330 million deal for 20 of Redcape’s National Leisure & Gaming-operated pubs.

Despite the abrupt turnaround, Laundy Hotel Group was insisting yesterday its slated acquisition was “still on track" to complete by Wednesday. The proposal also involves Woolworths’s hotel arm, ALH, taking over the property leases.

According to senior sources, the Laundy family is furious at Westpac’s decision to sell out to York Capital, a $14 billion multi-strategy hedge fund, without giving their long-term clients any advance warning.

NSW pub supremo Arthur Laundy has banked solely with Westpac for 50 years.

Woolworths, who stood to become the state’s largest pokies’ operator on the back of the Redcape deal, also boasts a long-running relationship with Westpac.

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Yesterday’s confusion over who controls the ailing trust extended to its biggest stakeholder, Ernst & Young. The accountancy firm is the receiver to founder Tom Hedley’s privately owned, 49 per cent slice of Redcape.

An expression of interest campaign scheduled for the next two weeks has been put on ice following the surprise debt deal.

Ernst & Young are unlikely to participate in any rights issue aimed at bolstering the trust’s coffers.